All posts in category Biofuels

Bankers are funding renewable energy projects again – at least in Europe. On the U.S. side of the pond, the financing for solar parks, wind farms and the like remain in a deep freeze, according to new figures from New Energy Finance.

Associated Press

The winds of (funding) change?

But there is reason to believe the U.S. situation is better than the numbers indicate – and the European situation is worse.

Asset financing in the U.S. totaled a measly $1.6 billion in the second quarter of 2008, down -66% from a year earlier. (Of course, it’s up from $300 million in the first quarter.) Ethan Zindler, head of North American research at New Energy Finance, says he expects deals are simply waiting for the U.S. Treasury Department to finally issue rules on their grant program and for the Energy Department to detail its loan guarantee program. “The market is on hold until these rules come out,” he says.

The upshot is that some deals that may have been concluded in the second quarter are on hold until the federal government speaks, creating the potential for a deal boomlet in the third quarter. Treasury says the rules are due in July. We’re waiting.

Imperium Renewables’ dream of profiting from peddling biodiesel while doing its part to save the planet has turned out to be just that: a dream. The two-year old biodiesel facility that was meant to be the cornerstone of the Seattle company’s renewable-energy empire hasn’t produced a drop of fuel since February. And it’s not the only one sitting idle.

Associated Press

The 100 million-gallon-a-year plant – once the largest such facility in the U.S. – located in an isolated logging town on Washington’s coast now serves as a storage depot for biodiesel – and a symbol of America’s stalled biofuels industry.

From the beginning it was a tall order for biodiesel makers to turn a penny. Even though petroleum prices skyrocketed last year, providing the rationale for a renewable alternative to diesel, the cost of agricultural feedstocks needed to make biodiesel also went through the roof, eating up profit margins.

But Imperium chief executive John Plaza also places the blame on the U.S. politicians’ failure …

A deal has been struck between House Democrats from states with strong agricultural interests (led by Minnesotan Collin Peterson, chair of the Agricultural Committee) and a certain House Democrat from a state with a history of trying to lead the nation on environmental policy matters (California’s Henry Waxman.)

The result: There will be a vote on the Waxman-Markey climate and energy bill on Friday. As we noted in March, the “American Clean Energy and Security Act is compromise bill out of the gate.”

Here’s what you need to know about the latest compromises that have allowed it to head to a floor vote. Mr. Waxman has agreed to language preventing the Environmental Protection Agency …

To anybody who’s seen biodiesel turn into a mayonnaise-like substance in cold weather, the prospect of crossing the Atlantic on a jet propelled by biofuel sounds downright scary.

But a consortium made up of Boeing, engine makers and commercial airlines says that veggie fuel is not only good for the airplanes’ carbon footprint – it actually performs as well, if not better, than its petroleum-based equivalent. The issue is a crucial one for the airline industry, which has vowed to achieving carbon-neutral growth by 2020 and whose fortunes are tightly tied to the volatile price of crude oil.

In 2008 and 2009, the consortium tested several blends of up to 50% biofuel in Boeing jets belonging to Air New Zealand, Continental Airlines and Japan Airlines. The blends were different combinations oil from jatropha (an oily seed plant that grows in arid climates), camelina (a fatty mustard-like seed) and algae.

The biofuels used in the tests were “drop-in”, meaning that engines didn’t require modification. Boeing says the blends didn’t damage the equipment, and actually proved to have more oomph, or “greater energy content” than standard jet fuel …

Despite the global economic slump, total clean-energy investment last year grew 5% to $155 billion. For the first time ever, investment in clean power generation outpaced investment in traditional energy sources: $140 billion for wind, solar, and the like compared with $110 billion for traditional power sources, according to a new report prepared by New Energy Finance for the United Nations’ Environmental Program.

The bad news: The global economic slump hit a lot harder this year, knocking first-quarter clean-energy investment down 53% to about $13 billion.

And in tough times, clean-energy investment is a tougher sell, because it means less bang for the buck…

The future of U.S. refining is looking murky, with demand for oil-based fuels in the doldrums and lawmakers threatening to squeeze petroleum profits with a cap-and-trade system.

That doesn’t bother Matt Clifton. The chief executive of Holly Corp., a small Dallas-based refiner, closed a deal on Monday to buy a refinery in Tulsa and plans to pump some $150 million into it to bring it up to speed. People are too downbeat about the prospects of good old crude oil, he figures, creating a buyer’s market for assets.

“Oil is still going to play an important part in our energy requirements,” he says.

One of the big knocks on next-generation biofuels has been that you need to cover New Jersey twice over to make a dent in the transportation-fuel market.

Good news. You might only need to cover New Jersey once.

Ceres Inc., a private California company developing seeds for biofuels, says the yield per acre it’s getting for switchgrass is improving. The company uses genetic mapping to find and cross breed plants with the most desirable traits to produce plants that generate more biomass.

A nationwide network of field trials showed Ceres’ switchgrass produced an average of 10 tons per acre and up to 19 tons per acre. This matters because increasing yield per acre means more crops can be planted close to cellulosic ethanol refineries. Most planned biorefineries are small because size is limited by proximity to crops. Improving the yield per acre means the industry can build bigger refineries and improve economics…

Biofuel defenders are howling about the Obama administration’s new environmental standards, announced earlier this month and which are meant to take into account the “indirect” environmental effects of growing more crops for fuel.

This week, as Tom Philpott at Grist notes, legislation was introduced in the House to roll back the Environmental Protection Agency’s new remit to hold ethanol (and all biofuels) responsible for all their greenhouse-gas emissions.

The thing is, biofuel proponents didn’t even wait. South Dakota Sen. John Thune pre-emptively struck out at the EPA’s new rules last month, introducing legislation that would offer the U.S. biofuel industry all sorts of escape hatches from complying with new environmental rules…

About one year ago, the former chief executive of biofuels company Virent Energy Systems was asked a simple question: What if your technology works beyond expectations and you have an economically competitive business of turning plant sugars into a gasoline. What next? Will you build Virent gas stations?

Eric Apfelbach’s response was quick and to the point. Virent, he said, had no intention of competing with Big Oil companies that have spent decades squeezing every last cent out of the fuel transportation and distribution business, making it as lean as possible. He would sell them the fuel and let them get it into motorists’ tanks. And this was before the credit crunch and financial collapse made dreaming about building a new distribution model, well, a dream.

Biofuels companies are now fully embracing the idea of partnering with oil companies. Angel Gonzalez of Dow Jones Newswires makes this change clear:

During the early years of the boom in investment and interest in alternative fuels witnessed earlier in the decade, entrepreneurs were charting a course that would have led to a separate supply chain: dedicated ethanol collection hubs, pipelines and filling stations. No longer. With the alternative fuel movement running up against falling demand and government regulation of carbon dioxide emissions, executives have realized that the nascent industry must complement, not compete with fossil fuels to succeed.

There’s a crude reality at play here. Even if big oil producers decide to sit out the early-stage development of biofuels, these companies have sunk billions of dollars into pipelines, refineries, blending tanks, wholesale gasoline distribution hubs and gas station networks. It will be near impossible to deal them out of the game.

The Obama administration is tying itself in knots trying to figure out the best biofuels policy to reduce oil dependence and help the environment. Should they first ask themselves: Are liquid biofuels simply the wrong approach in the first place?

A new paper in Science says that using biomass—corn or switchgrass—to make electricity rather than ethanol is the smarter move on all counts. “Bioelectricity” offers more energy per acre of cropland, and fewer environmental impacts. Scientific American does the heavy lifting.

Specifically, in the case of a mid-sized car, turning switchgrass into electricity (rather than fermenting it into ethanol) would yield three times as much energy and save 50% more greenhouse-gas emissions, the study found.

It’s no surprise that electric motors are more efficient than internal combustion engines…

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Environmental Capital provides daily news and analysis of the shifting energy and environmental landscape. The Wall Street Journal’s Keith Johnson is the lead writer. Environmental Capital is led by Journal energy reporter Russell Gold, and includes contributions from other writers at the Journal, WSJ.com, and Dow Jones Newswires. Write us at environmentalcapital@wsj.com.